Buying a presale property can be a significant financial decision, and it is crucial to be well-informed before committing to such an investment. In this comprehensive guide, Jersey Li Personal Real Estate Corporation will walk you through the ins and outs of presale properties, revealing five essential things you should know to make a smart purchase. Whether you are a seasoned investor or a first-time homebuyer, these insights will empower you to navigate the presale market with confidence.
1. What is a presale property?
Before delving into the finer details, it’s important to clarify the concept of presale properties. Also known as preconstruction, a presale property refers to the purchase of a property before it is constructed. The development process varies depending on the type of property:
- Townhouses typically take around 1.5 years to build.
- Low-rise wood frame apartment buildings usually take about 2 years to build.
- High-rise concrete structure apartment buildings typically take approximately 4 years to complete.
Understanding this process sets the foundation for your presale property journey. Keep up to date with the most recent real estate news and insights by visiting Jersey Li’s blog.
2. The process of presale properties
To gain a comprehensive understanding, it is essential to view presale properties from the developer's perspective. The developer is the individual or company that acquires the land, while the builder is responsible for constructing the building on that land. Here are the key steps in the presale process:
- Land Assembly: Developers often buy multiple lots and combine them to create a larger development site.
- Demolition permit: After acquiring the land, the developer will clear the site by demolishing existing structures.
- Development permit: the developer would apply for one. The conversion of residential use to a comprehensive dwelling, for instance, would be done by changing the zoning from an RS-5 to a CD.
Presale usually occurs at this point or afterward.
- Disclosure statement: Before launching a presale project, developers must file a disclosure statement. This statement outlines the terms and conditions of the presale, essentially representing what buyers are purchasing. Most lenders, especially banks, require a certain percentage of the presale project to be sold if a developer wishes to borrow money to build a building. Developers must file a disclosure statement before launching presale projects. In essence, the "Disclosure Statement" is what you are buying when purchasing a presale property.
- Building permit: Developers are required to obtain building financing and building permits within 12 months of submitting their "Disclosure Statement". Construction can then begin.
- Construction updates and amendments: Throughout the construction process, the disclosure statement may undergo minor or major changes, communicated to buyers via amendments.
- Completion and move-in: Developers notify buyers about the completion of their building when it is close to completion, usually within three months. The deposit paid by the buyer will be used as part or all the down payment, and a mortgage will be obtained from the bank to complete the purchase. Remember that pre-sales often take 3-6 months longer than originally anticipated. It is also possible for some projects to be completed earlier than expected.
3. The advantages of buying presale
Several advantages attract buyers to presale properties:
- Price: Buying a presale property locks in the current price, offering potential savings compared to the future market value.
- Leverage: With a deposit of 10% to 20%, buyers can benefit from the property's appreciation in value over the construction period.
- Time flexibility: Ideal for those who may not qualify for a mortgage immediately, presale properties allow buyers time to improve their financial situation before securing a mortgage.
- Investment opportunity: Investors often target presales in promising upcoming areas, securing properties at a lower price and anticipating substantial gains as the community matures.
4. Choosing the right presale project
Selecting the right presale project is vital for a successful investment. Consider these factors:
- Location: Opt for projects close to key amenities like SkyTrain stations or shopping malls, which can enhance the property's value. You can also research the average rent prices in Metro Vancouver.
- Developer's reputation: Trustworthy developers with a track record of successful projects provide added peace of mind.
- Presale price comparison: Research and compare prices of similar presales in the area to ensure competitiveness.
- Existing property price comparison: While rare, a presale property priced similarly to existing properties might indicate a promising opportunity. Browse through a wide range of real estate presales and MLS listings to compare.
5. What to avoid when buying presales
To mitigate risks, steer clear of these pitfalls:
- Questionable developers: Be cautious of developers with a poor reputation or unknown background.
- Uncertain permit status: Verify the presale developer's permits with the city to ensure a smooth development process.
- Financial stability of developers: Investigate the developer's financial status and how they are funding the project.
- Price adjustment clauses: Avoid agreements that shift excessive cost burdens onto buyers due to rising construction costs.
Navigating the presale market with expert guidance
Given the complexities of the presale market, seeking expert advice can be invaluable. Jersey Li, a renowned presale property real estate expert, can guide you through the process, identifying ideal investment opportunities and the best time to buy real estate properties. To explore presale options tailored to your needs, get in touch with Jersey Li at 778-991-0051 or visit the website primeprec.com.
Understanding the presale property landscape is crucial for making informed decisions. By grasping the process, benefits, and potential risks, you can embark on a rewarding presale property journey and secure your financial future. Remember, knowledge is the key to unlocking a successful presale investment. Happy house hunting!